California clears sales of higher-ethanol fuel to lower gasoline costs

California Governor Gavin Newsom signed a bill on September 21 that allows the immediate sale of a higher-ethanol fuel blend, E15, in the state. This legislation aims to address the issue of skyrocketing gasoline costs in California, the largest auto market in the United States. E15, which contains 15% ethanol, had been prohibited from sale in California for over a year.

Newsom stated that the bill removes unnecessary red tape while maintaining environmental and safety standards, and enables E15 to become a real option for California drivers. The measure is expected to benefit ethanol producers and corn growers by opening up the state's vast market to the higher blend.

Eric McAfee, CEO of Aemetis, a renewable fuels producer based in Cupertino, California, estimated that the change could increase annual ethanol demand in the state by around 650 million gallons. Currently, ethanol sells for approximately $2.30 per gallon, making it significantly cheaper than gasoline in California.

The national average gasoline price was $4.44 per gallon on Sunday, while California's price hovered near a record high of $6.14 per gallon, according to GasBuddy data. The approval of E15 comes as Congress considers allowing year-round sales of the blend nationwide. The issue has gained urgency following the US war with Iran, which has caused fuel prices to spike and raised concerns about crude supply disruptions.

The Renewable Fuels Association estimates that E15 could reduce retail gasoline prices by around 20 cents per gallon and save California drivers at least $2.7 billion annually, according to a study by economists at the University of California, Berkeley, and the US Naval Academy.